It's a peculiarly Chinese way of dealing with things, the last-minute cancellation. Now China's gay community have learned, just like music festival organisers before them, that even licences and assurances can't protect a controversial event from a late knock on the door from the police. But Friday's cancellation of China's first official gay pageant, hours before it was due to begin in Beijing, will sting more than most government interventions. This was supposed to mark a new dawn for China's LGBT population. Instead, after a decade of mixed signals, China's gay community just wants the government to talk straight for once.

It's easy to see why the Chinese gay rights movement has been left wondering just where it stands. Homosexuality was only removed from the state-approved list of mental illnesses in 2001, and since the government has broadly taken a laissez-faire approach to the issue. While Beijing is home to a handful of gay clubs, it would be extremely unusual to see a gay couple openly affectionate in any other public place. It appeared the government was happy for a gay community to exist, as long as it broadly stayed out of the public eye.

Yet last year, something seemed to change. In April, the state-run China Daily, the country's largest English-language newspaper, splashed a picture of a gay couple marrying close to Tiananmen Square on its front page. Although the marriage was primarily ceremonial and not legally binding, it was state-approved. The paper ran a similar front page story last week, days before the cancellation of the gay pageant.

And there were more signs that senior officials were keen to, if not promote, at least educate Chinese people about gay rights. I was asked by an editor at one of China's most popular state-run youth newspapers to write an article last year detailing how "being gay is OK now". It seemed a strange request at the time, but was just one of a series of articles featured in the newspaper that made an effort to talk more openly about sexuality.

So why the sudden change? One reason could be to address China's youth, which is often woefully uninformed on sexual issues. Rising numbers of HIV cases (estimates suggest around 700,000 Chinese are HIV-positive), and an increased exposure to more sexually liberal western television and film may have forced the government's hand on discussing not just gay issues, but sex in general. The government would rather maintain some control over sex education than allow shows such as Desperate Housewives – immensely popular among Chinese students keen to improve their English – to do the job for them.

Chinese forums are awash with the debate, another sign that things may be changing. One poster even joked that tóng xìng (same-sex) relationships could be the answer to the country's lopsided boy-to-girl ratio. It is estimated that by 2020 around 24m Chinese men of marrying age will be without spouses.

When the owner of a bar announced to me a few months ago that he was rebranding his establishment as a gay club, it was not a political but a financial statement. But it was also a sign that going gay can bring financial incentives in the city's hyper-competitive bar and club scene. As ever in China, it could be economic growth that precedes social change.

Yet still, as events on Friday showed, there is a strong enough reactionary presence within the party to clamp down on what it sees as politically sensitive. The cancellation will serve as a warning that while homosexuality is now tolerated, the government continues to have the final say on what is and what isn't allowed to be publicly promoted. For the time being China's gay community will remain in the shadows, but as a sexual revolution approaches, it might not be long before a Chinese man is proclaimed Mr Gay World.